Swiss Federal Administrative Court reduces fines against building companies and clarifies the legal assessment of accusations submitted by leniency applicants

In a bid-rigging case against building companies from the Canton of Aargau, the Swiss Federal Administrative Court has upheld most of the findings of the Competition Commission, but has reduced the fines imposed from approximately CHF 2.8 million to approximately CHF1.9 million. The written reasoning of the judgment clarifies the legal assessment of potentially false accusations submitted by leniency applicants.

Background

After completion of its investigation at the end of 2011, the Competition Commission (COMCO) concluded that 17 companies had agreed to fix prices and also determined who was to be awarded the respective contracts in connection with a number of road construction and civil engineering tenders in the Canton of Aargau between 2006 and 2009. COMCO imposed fines on these companies amounting to CHF 4 million.
Four of the sanctioned building companies appealed to the Federal Administrative Court (FAC).

Considerations of the FAC

The FAC confirmed COMCO’s classification of the construction companies‘ conduct as hardcore horizontal price-fixing agreements and agreements on the allocation of markets by business partners. The FAC could not find any evidence of a pre-determined rotation system between the construction companies. Therefore, it had to examine all of the contested bid-rigging arrangements individually.
The FAC examined all of the 137 contested tenders and concluded that the four appealing companies had been involved in 95 of them in an illegal manner under competition law. With regard to 42 tenders, the court held that, contrary to COMCO’s assessment, there was insufficient evidence. Therefore, the FAC reduced the sanction from approximately CHF2.8 million to approximately CHF1.9 million.
The FAC stated that, even if accusations, from leniency applicants against other companies have been submitted, a thorough assessment of the evidence is required. A reduction of the burden of proof or other facilitations do not apply in such cases: COMCO must demonstrate the antitrust infringement for each party with regard to its participation in a bid-rigging agreement. The FAC stated that regardless of the fact whether there are allegations by leniency applicants or not, the same requirements apply to the evidence and the burden of proof.
Furthermore, the FAC stated that accusations made in a voluntary report against other competitors are not sufficient evidence if the non-co-operating companies deny these accusations. Instead, the competition authorities must take into account all the specific circumstances of a case, e.g. the statements of the companies who filed a voluntary report and the statements of the non-co-operating companies. If the situation remains unclear, further investigations and taking of evidence is needed. In practice, these principles mean that there has to be an additional piece of evidence that corroborates the accusation of another company.

Comment

This is the second judgment that deals in depth with the subject of accusations submitted by other companies. The clear principles developed by the FAC are to be welcomed. They protect companies from unsubstantiated or incorrect allegations from other undertakings. Leniency applicants have an incentive to report all potential competition law infringements to profit from full immunity.
The legal design of the leniency programme bears a certain risk that in cases of doubt the leniency applicants submit comprehensive accusations. The FAC has recognised these risks and has developed an adequate measure to protect third parties from false accusations.
The FAC is ready to apply these principles and to assess in each individual case whether there was enough evidence for a conviction or not.

This blog post was first published on Thomson Reuters‘ Practical Law website. It is reproduced from Practical Law with the permission of the publishers. For further information visit http://www.practicallaw.com or call +44 (0)20 7542 6664.

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